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29 March 2024

A good tenant or higher rent?

Published
By Parag Deulgaonkar

Though there a number of landlords in Dubai arbitrarily increasing rents, there still are a few who aren’t joining the bandwagon.

These landlords (in leasehold or freehold areas) prefer to have tenants, who keep their apartments in tidy condition and pay their rents on time. These landlords don’t follow the market trend by hiking rents on the basis of asking rentals published by real estate agencies online or in print.

Mustafa Kelmi is staying in a two-bed apartment in Bur Dubai area for the past 15 years for just Dh45,000 per year.

He says: “My landlord has increased my rent only twice and lowered it once in the past 15 years. He is an Emariti and is only concerned with residents taking care of his building and honoring their cheques.”

Kelmi’s rent was hiked by 5 per cent in 2002 and again by 5 per cent in 2006. The landlord later lowered his rent by 5 per cent in 2008.

“When it is time to renew our contract, the building manager inspects the apartment and if he is satisfied then he renews it without any increase. And whenever they planned to increase our rent, they did give us prior notice.”

However, the penalty for cheque bounce is Dh750. If the cheques bounce twice, the tenant is informed that his tenancy contract won’t be renewed.

In the freehold areas as well, some landlords are opting to retain tenants who pay rents on time and keep the apartment clean and in good condition.

“I have been staying in the same apartment in Discovery Gardens since past four years. My rent was increased by only five per cent this year even though the landlord could have easily got over 20 per cent than what I am currently paying,” said Daniel G, a Filipino.
“I take good care of his apartment… I have never asked him to pay for minor repair works. When I saw his name on the service charge defaulter list, I informed him and he cleared the dues the next day so I could get the access cards.”

Suresh Kumar, an owner of a two-bed apartment in Dubai Marina, faced a daunting task to get his tenant to pay his rent.

“The last two cheques of my tenant bounce and I served him with a notice. He paid Dh500 penalty in cash but borrowed time to arrange for payment. Till then the final cheque was due. It too bounced.

“I served him the notice to vacate, which he did after the contract expired. The only thing I did was to forfeit his five per cent deposit.”

He said this time he did ask his tenant to provide his salary certificate and bank statements before renting the apartment to him.

(Read: Keep salary certificate, bank statements ready to rent in Dubai)

Earlier this year, Knight Frank Prime Global Rental Index revealed rents in the emirate rose by 18.3 per cent in the year to March.

Parvees Gafur, Chief Executive Officer, PropSquare Real Estate, told this website last week that rents were less likely to increase immediately as the real consumer will take time to enter markets subject to their mobilisation of businesses.

What the 2011 rental law says:

According to Decree No. 2 of 2011 on rentals in the Emirate of Dubai, the landlords can increase the rent as below.

Article (1)

The maximum rent increase percentage of property units in the Emirate of Dubai leased before the enforcement of this Decree shall be as follows:

A - There should not be any rent increase, if the rent for the real estate unit is up to 25% below the average similar rent.

B - If the rent value was 26% to 35% less than the average similar rent; the maximum rent increase shall be equal to 5% of such value.

C -If the rent value was 36% to 45% less than the average similar rent; the maximum rent increase shall be equal to 10% of such value.

D - If the rent value was 46% to 55% less than the average similar rent; the maximum rent increase shall be equal to 15% of such value.

E - If the rent value was less than 55% of the average similar rent; the maximum rent increase shall be equal to 20% of such value.

Article (2)

For the purpose of this Decree the similar rent value of the property unit means pursuant to “The Rent Index of the Emirate of Dubai” approved by RERA.

Article (3)

This Decree shall be enforced from the date of its issuance and shall be published in the Gazette. Issued in Dubai on 10 January 2011